Crypto Market Wipes Out September Gains as Bitcoin Barely Hangs On: Analysis

Brace yourselves, the Red September curse is upon us.

The crypto market has officially entered negative territory for September, despite Bitcoin holding on to a slight gain, after a brutal week that erased $162 billion from crypto valuations. The wipeout canceled out the gains generated from the bullish two-week start to the month, back when Bitcoin briefly notched its second-best September performance in 13 years.

The seasonal curse, though, doesn’t seem to be affecting traditional markets, despite September also being historically the worst month of the year for Wall Street. The S&P 500 gained 0.64% over the past 24 hours while gold retreated 1.2% from recent highs near $2,670 per ounce showing investors still want risk instead of hedge.

That risk appetite, however, does not appear to currently extend to crypto—outside of a few, recent overperformers, such as the still only-a-week-old Aster.

The crypto market’s longstanding correlation with broader risk assets is today offering little relief, with Bitcoin unable to hold the line at the crucial $111,000 support mark and Ethereum breaking below $4,000, triggering cascading liquidations across digital assets.

The crypto market as a whole has dropped 4.7% so far today, falling to $3.73 trillion and extending a seven-day decline that has revived talk of September’s notorious weakness for digital assets.

Bitcoin’s remaining 1% gain for the month, trading now at just above $109,000, represents the sole barrier preventing the entire crypto market from posting even bigger monthly losses—a precarious position given the asset’s 67% market dominance means minor selling pressure could flip the narrative completely red.

Red September: The fundamentals behind the curse

September has historically delivered negative returns for crypto markets in eight of the past 11 years, a phenomenon traders attribute to institutional portfolio rebalancing after summer holidays and fiscal year-end adjustments.

This year’s pattern seems to be following the script: Despite early buyings pushing the total market cap above $4 trillion with trading volumes surging 27% in the opening days of September, profit-taking mid-month could end up pushing performance to a monthly net loss.

The mechanics of the current selloff reveal how leverage amplified the damage. When Ethereum dropped 9% below the psychologically important $4,000 level—its first breach since August—it triggered $500 million in long liquidations on that asset alone. The contagion spread immediately to smaller tokens more prone to volatility.

The Altcoin Season Index, which measures capital rotation between Bitcoin and alternative cryptocurrencies, fell sharply over the week from 77 to 69 points as investors retreated to the perceived safety of the largest cryptocurrency, Bitcoin. In other words, traders are getting rid of their tokens, some of them rotating into Bitcoin, as the nervousness intensifies.

For what it’s worth, the way the Alcoin Season Index is structured, it does not matter whether traders are swapping altcoins for Bitcoin or exiting the market completely: Bitcoin dominance increases in either scenario.

What’s more, regulatory headwinds are compounding the observable technical weakness in the charts. The Senate’s October 1 crypto tax hearing and SEC/CFTC joint roundtable on September 29 create event risk that could catalyze selling if outcomes disappoint. Historical data shows crypto markets typically decline 3-5% in the 48 hours preceding major regulatory announcements as traders reduce exposure.

Can Bitcoin save crypto from Red September?

At the moment, the charts say Bitcoin is holding the life saver, but it’s losing its strength.

Users on Myriad, a prediction market operated by Decrypt’s parent company Dastan, believe there’s a nearly 60% chance today will be another red day for BTC, meaning the price of Bitcoin will close the day lower than when it started.

On the plus side, Myriad prediction market users place the odds at 68% that Bitcoin manages to stay above $105K throughout the September. But, for context, those odds have dropped rapidly in just the last few hours, falling from 84% early this morning.

Looking ahead to “Uptober”—with October being historically the best month for crypto markets—Myriad users currently favor the price of Bitcoin reaching $120K, but only by a slight margin over the $110K to $11K range. So, perhaps a green month ahead—just not that green.

Do the charts agree with predictors?

Bitcoin’s technical structure suggests the largest cryptocurrency by market cap may struggle to prevent the broader market from slipping into September losses, despite currently trading above $109,000 and within an ascending trend that has been in place since March.

While Bitcoin maintains a golden cross formation—where the 50-day moving average sits above the 200-day line, typically a bullish configuration—momentum indicators tell a different story. The Squeeze Momentum indicator has flipped to a bearish impulse, marking a shift in short-term direction that often precedes deeper corrections.

The Average Directional Index, or ADX, reads just 17, well below the 25 threshold that signals a strong trend in either direction. This weak trend strength means Bitcoin lacks the momentum to push decisively higher or lower, leaving it vulnerable to external shocks.

The Relative Strength Index—basically a thermometer of how hyped an asset is—sits at 42, having declined from overbought conditions above 70 just weeks ago. This rapid deterioration in momentum while price remains elevated often marks distribution phases where larger holders sell into residual buying interest.

Bitcoin’s ascending channel, while appearing bullish at first glance, actually constrains upside potential. The coin has been bouncing at a very solid support line, showing that bulls refuse to die when prices dip too much. However, the top doesn’t match the bottom, and prices are showing a “lower highs, higher lows,” pattern that usually ends in compression before an explosive movement in the near future.

Bitcoin’s inability to reclaim $115,000 after three attempts this month has created a descending triangle on shorter timeframes, a pattern that resolves lower 67% of the time, according to technical analysis textbooks. The measured move target from this formation points to $108,000, which would represent a 5% decline sufficient to push the entire crypto market into negative territory for September.

The good news for bulls? September will be over in five more days. The bad news? Uptober is no guarantee either.